CROWD
FUNDING
A New Brunswick
business lawyer���s
perspective
By Peter Klohn
A
person enters a casino (real or virtual)
and places a bet of $1,000 on a single
number on a roulette wheel. The player
has a general understanding of the game
and its outcomes. Within seconds, the participant
receives $35,000 or has lost their bet. There are
widely diverse opinions about the social value of
this transaction notwithstanding the fact that it
occurs in an extraordinarily regulated environment
which is evolving constantly.
A person signs onto the Internet and discovers
a request for funds from a commercial enterprise
that is in its infancy. On the basis of limited
information, money changes hands with a
2 SPRING 2013 DOING BUSINESS IN ATLANTIC CANADA
potential for gain or, most likely, since the failure
rate of fledging ventures is high, likelihood of total
loss. The debate in Canada is ongoing about the
social value and proper regulatory environment
for transactions in this proposed social media
marketplace called ���crowd funding���. As yet, the
Canadian provincial securities regulators have
not weighed in on the topic notwithstanding early
regulatory advances in the United States including
the passage in April 2012 of the Jumpstart Our
Business Startups (JOBS) Act into law. Delays in
the issuance of regulations by the Securities and
Exchange Commission (SEC) in the United States
suggest that there may be little legislative progress